Cost Sharing Okay to Prescribe
People who have to pay for at least part of their health care use medical services, on average, one-third less often than those for whom such care is "free." When we reported on that finding two years ago in Trends, it was still an open question whether cost sharing and its reduced use of medical services results in poorer health, a widely predicted outcome. But now, the second part of a major study funded by the federal government and conducted by the Rand Corp. has found no significant negative effects on health.
In the study designed to test the effects of different health-insurance arrangements, nearly 4,000 persons were monitored over periods of 3 or 5 years. Only a slight improvement in the vision of nearsighted people and a slight decrease in the blood pressure of hypertensive poor people—which, in that group, reduced by one percent the risk of early death—were correlated with access to free care. The Rand researchers found no evidence that the greater use of medical services under free care improves the average person's general health or health habits, such as smoking and diet, associated with heart disease and many types of cancer.
Growing Problems in California
The victims of California's Agricultural Labor Relations Act and its biased administration favoring the United Farm Workers (UFW) union, reported by Patty Newman in REASON's September cover story ("Harvest of Power"), include farm laborers and their employers. A dramatic confirmation of Newman's conclusion was provided recently when one of the largest growers of fruits and vegetables in California's Imperial Valley, Abatti Produce, Inc., announced in December that it plans to get out of the farming business altogether.
The reason, according to a company statement quoted in the Los Angeles Times, is "the atmosphere of confusion, intimidation and coercion which has resulted from the efforts of the Agricultural Labor Relations Board and the United Farm Workers to coerce Abatti Produce, Inc., into either agreeing to a collective-bargaining agreement on terms dictated by the UFW or else facing a potential…liability which the ALRB's regional director claims is approximately $18.5 million."
Abatti had hoped to end a decade of labor problems by offering its 2,500 workers a contract including wage hikes of about 20 percent and a cash-and-benefit package of more than $1.45 million, most of which would have gone to settle outstanding UFW charges of unfair labor practices. The statement included a remark by company president Ben Abatti that "other major growers may follow suit until the ALRB and UFW oppression is stopped."
Sunkist Squeezes Harder
In 1981, REASON authors Michael McMenamin and Diane Connelly exposed the lobbying of the nation's largest orange-grower cooperative to keep in place the government-fostered price fixing that drives up the cost of citrus fruit (and other farm products) for consumers ("How Sunkist Put the Squeeze on the FTC," Nov. 1981). As sensible as a free market in oranges and lemons would be, big citrus growers like Sunkist will have none of it. In November, the growers again flexed their political muscle on Capitol Hill. After intense lobbying, Congress cut off funds for the Office of Management and Budget even to review the marketing orders by which growers control prices (OMB Director David Stockman has been a vigorous opponent of the orders).
Ironically, the growers have a powerful friend in the White House. Last May, President Reagan had announced his intention to modify marketing orders, because they interfere with the dynamics of a free market—but by December, he was singing quite a different tune. After a White House breakfast meeting with presidential counselor Ed Meese, Agriculture Secretary John Block, Sunkist lobbyist Jim Lake, and Sunkist executives, the White House abandoned its plans to reform or abolish the existing system.
Meanwhile, serious battles over marketing orders are being fought in the courts. The New York Times reports that Sunkist has successfully pressured the Justice Department into suing defiant orange grower Carl Pescosolido (Spotlight, April 1983) for selling too many oranges. The government wants Pescosolido and his partners to forfeit the $3.4 million they took in for oranges shipped from 1978 through 1981 in excess of the quota assigned them by the Navel Orange Advisory Committee, which is dominated by Sunkist.
But Pescosolido is being represented by Dan Burt of the Capital Legal Foundation, a libertarian public-interest law firm in Washington. Burt (another REASON Spotlight subject, July 1982) has gone on the offensive, filing suit to have the quantity controls declared unconstitutional.
Cable able. "It might occur to the mere and actual consumers of television services to ask why they must settle for one and only one cable company," Tom Hazlett wrote in "The Viewer Is the Loser!" (July 1982). Century Federal, Inc., a cable company, evidently agrees. One of five firms to apply for a franchise in three communities in California, it has filed a lawsuit contending that the practice of granting exclusive rights to serve an area violates the First Amendment's free-speech provision. Meanwhile, Pacific West Cable Co., a losing bidder for a cable franchise in Sacramento, is challenging that city government's right to grant an exclusive franchise. Pacific West is arguing that exclusive franchising violates antitrust law.
Contracting expanding. In December, the town council of Troutman, North Carolina, voted to hire Investigations and Securities, Inc., of nearby Statesville to provide police service for the town of 5,000. So the legend of Reminderville, Ohio ("Cops, Inc.," Nov. 1982), lives on. On another front, the Corrections Corp. of America (see Trends, Jan.) has begun building its first prison, under contract to the Immigration and Naturalization Service. The Houston-area facility is expected to begin operation this year.